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spk02: Hello, my name is Chris and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Arrow Electronics second quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. To withdraw your question, please press star one again. Thank you. Anthony Benchivenga, Vice President of Investor Relations. You may begin.
spk08: Thank you, Chris. I'd like to welcome everyone to the Arrow Electronics Second Quarter 2023 Earnings Conference Call. Joining me on the call today is our President and Chief Executive Officer, Sean Kerens, and our Chief Financial Officer, Raj Agrawal. During this call, we'll make forward-looking statements, including statements about our business outlook, strategies, and future financial results, which are based on our predictions and expectations as of today. Our actual results could differ materially due to a number of risks and uncertainties, including the risk factors described in our most recent 10-K and 10-Q filings with the SEC. We undertake no obligation to update publicly or revise any of the forward-looking statements as a result of new information or future events. As a reminder, some of the figures we will discuss on today's call are non-GAAP measures, which are not intended to be a substitute for GAAP results. We've reconciled these non-GAAP measures to the most directly comparable GAAP financial measures in this quarter's associated earnings release or Form 10-Q. You can access our earnings release at investor.arrow.com, along with the CFO commentary, the non-GAAP earnings reconciliation, and a replay of this call. We've also posted a slide presentation to accompany our prepared remarks and encourage you to reference these slides during this webcast. Following our prepared remarks today, we'll be available to take your questions, and now I will turn the call over to our President and CEO, Sean Cairns.
spk04: Thanks, Anthony, and thank you all for joining us. Today, I'd like to discuss our Q2 performance, provide some color regarding the market overall, and then close with a couple key thoughts as we think about the future. I'll then turn things over to Raj for more detail on our financials, as well as our outlook for Q3. In the second quarter, Arrow delivered sales and earnings per share within our expected ranges, consistent with a softer semiconductor market and a mixed information technology spending environment. Our global team continues to deepen relationships with our suppliers and increase engagements with customers, always with an emphasis on our value-added offerings and capabilities. As a result, we believe we're well-positioned to help our suppliers and customers navigate the current environment while positioning them for the many growth prospects that lie ahead. Having said that, we recognize we operate in a cyclical industry, and we're currently managing through an inventory correction. While I can't say for certain how long this will last, I can tell you that we've experienced these cycles before and fully understand what it takes to navigate them. We've always been a resilient business and see times like these as opportunities to strengthen the company for the future. To that end, we remain focused on our strategic priorities for creative growth and exercising prudent cost management and working capital discipline. In our global components business, there are a few dynamics currently at play. Component lead times are coming down. We've seen consistent improvement in average lead times for the past few quarters. While they're not quite back to pre-pandemic rates across the board, there has been substantial progress. At the same time, inventory levels throughout much of our customer base remain elevated. Consequently, while longer term electronics markets are expected to grow, The total addressable market for semiconductors, according to multiple sources, will clearly decline in 2023. While it may take time to work through existing inventories, we are encouraged that in general, and particularly in the West, end of market demand appears to be fairly steady. And in addition to improving lead times, we do see other indicators that speak to the underlying health of the business. In Q2, the pricing environment was largely stable. Our book-to-bill rates, though below parity, continued to hold steady. Our design-related activity grew substantially, and we're seeing continued adoption of our supply chain services offerings. Now, to take a look at each of our operating regions in a little more detail, in Europe, we saw a slight sequential decline in revenue, but that was better than normal seasonality, and we achieved robust year-over-year growth from a resilient industrial market along with strength, in automotive as well as aerospace and defense. In the Americas, we experienced a sequential and year-over-year decline in revenue. However, performance was stronger when adjusted for the further decline we experienced in the shortage market, which we now believe to have largely normalized. In addition, our focus on the market for interconnect, passive, and electromechanical devices is helping to offset a more challenging semiconductor operating environment. And in Asia, while we experienced continued softness in the Chinese market across both verticals, we did grow sequentially in the region with relative strength in sales from networking and communications infrastructure, along with modest improvement in parts of both the industrial and consumer segments. Profitability in our global components business remained above historic levels in the second quarter, Given a fairly stable pricing environment, the sequential operating margin decline was mainly a function of regional mix and a decline in volume along with the associated impact to operating leverage. We continue to believe our value-added offerings, including demand creation, design services, and supply chain management, are contributing to our structural margin health and remain committed to our long-term profitability outlook for this business. Now, switching gears to our enterprise computing solutions business. Sales for the second quarter were down year on year, largely a function of mix, as we saw relative strength in cloud, software, and services as customers migrate to IT solutions delivered on an as-a-service basis. Operating income grew modestly year on year and was in line with our expectations. The favorable mix contributed to year-over-year operating margin improvement. In Europe, Demand for cybersecurity solutions and other infrastructure software remain healthy. We were also pleased by the continued adoption of our hybrid cloud portfolio, which is enabled through our AeroSphere digital platform. And in the Americas, we saw relative strength in the public sector. We continue to focus on expanding our customer base in the mid-market and are seeing steady progress, even against the backdrop of softer enterprise IT demand. Now, before I hand things over to Raj, I'd like to offer just a couple thoughts as we look to the future. First, I want to be clear. I'm very excited about the key markets in which we operate and believe the long-term growth prospects are promising. Consider just a few key trends. The electrification and connectivity of everything. The accelerated adoption of new technologies such as electric vehicles. renewable energy, and artificial intelligence, just to name a few. And in the IT space, the growing relevance of hybrid and multi-cloud solutions all delivered on an as-a-service basis. And second, while the current market trajectories are challenging and a little bit uncertain, we're confident in our ability to generate cash in the near term, providing us the flexibility we need to serve our capital allocation priorities very effectively. And with that, I'll hand things over to Raj.
spk07: Thanks, Sean. Consolidated revenue for the second quarter was $8.5 billion, down 10% year-over-year. Changes in foreign currencies had a negligible effect on revenue during the quarter. By business, global components sales were $6.7 billion, within our expected range down 10% year-over-year. Notably, We had significant year-on-year growth in EMEA with strong performance in the industrial and automotive markets. In enterprise computing solutions, sales were $1.8 billion, also within our expected range and down 8% year-over-year. Moving to other financial metrics for the quarter, consolidated gross margin of 12.5% was down 60 basis points year-on-year, principally due to reduced volumes in the component shortage market. partially offset by improved product and region mix in the enterprise computing solutions business as customers continue to shift from hardware solutions to software and cloud solutions. Non-GAAP operating expenses were $656 million, a reduction from both last quarter and last year. We continue to look for further cost reduction opportunities in this environment. Non-GAAP operating income was $410 million, or 4.8% of sales, with global components operating margin coming in at 5.8%, and enterprise computing solutions coming in at 4.8%. Interest and other expense was $85 million, which was better than expected due to lower average daily borrowings during the quarter. Our non-GAAP effective tax rate of 23.1% was in line with our expectations. Diluted EPS on a non-GAAP basis for the second quarter was $4.37 in line with our expectations and based on a 57.4 million share count. Now moving on to working capital. Networking capital was up slightly from Q1 at $7.5 billion. Accounts receivable increased slightly from Q1 to $11 billion, driving days of sales outstanding to $118 from $111 at the end of the first quarter. Accounts payable were flat, sequentially at $9 billion, bringing days of payables to $111 from $104 last quarter. Inventory decreased by about $75 million to $5.5 billion, with inventory turns remaining at 5.5 turns. With inventory down slightly and the changes in days payable offsetting days of sales, our resulting cash conversion cycle was roughly flat from last quarter at 74 days. Cash flow used for operating activities in the second quarter was $127 million. In conjunction with the cash generated in the first quarter, on a year-to-date basis, cash flow from operations was $97 million. We do continue to have confidence in our ability to generate positive cash flow. That debt for the second quarter was up slightly from Q1 at $3.9 billion, and total liquidity stands at approximately $2.1 billion, including our cash balance of $240 million. Our balance sheet remains strong and provides us with ample financial flexibility. Consistent with our priority of enhancing shareholder value, we repurchased shares in the amount of approximately $200 million during the second quarter. At the end of the second quarter, our remaining stock repurchase authorization stands at approximately $824 million. Please keep in mind that the information I've shared during this call is a high-level summary of our financial results. For more details regarding the business segment results, please refer to the CFO commentary and the earnings presentation published on our website. Now turning to Q3 guidance. We expect sales for the third quarter to be between $7.78 billion and $8.38 billion. We expect global component sales to be between $6 and $6.4 billion, which at the midpoint is down 7% from prior quarter, and reflects the currently elevated inventory levels across our customer base and continued softness in Asia. We expect enterprise competing solutions sales to be between $1.78 and $1.98 billion, which at the midpoint represents a 4% decline year on year. We are assuming a tax rate in the range of approximately 23 to 25% and interest expense in the range of $85 to $90 million. Our non-GAAP diluted earnings per share is expected to be between $3.40 and $3.60 on average diluted share count of 56 million shares. We expect sequential decline in revenue and reduced operating leverage to be the primary drivers of the sequential decline in EPS. We estimate changes in foreign currencies will benefit sales in Q3 by approximately $212 million and EPS by approximately 11 cents compared to the prior year. Compared to the prior quarter, we estimate changes in foreign currencies will benefit sales by $42 million and benefit EPS by 4 cents. I will now turn the call over to the operator for Q&A.
spk02: Thank you. And as a reminder, if you would like to ask a question, please press star, then one on your telephone keypad. Our first question is from Matt Sheeran with Stifel. Your line is open.
spk03: Yes, thank you, and good afternoon, everyone. Sean, I'd like to... just get a little bit more color on your guidance for the component business in the September quarter. It looks like you're guiding down roughly 15% year-on-year, 7% sequentially. You do normally see sequential growth in Asia in September. And as we look at the numbers now, is that expectations for that growth, which would imply North American Europe down kind of mid-teen sequentially. Does that make sense?
spk04: Morning, Matt. I think those numbers would be a little bit extreme. We are guiding sub-seasonal in Asia for the region. I think we continue to see softness in China. That's probably not new news to anybody. We just haven't quite seen the rebound yet that the market expects. But our Our sequential decline in Europe and the Americas, though sub-seasonal, are not as significant as you suggest. Those are mainly a function of just the elevated inventory levels that we see in the business, whereas the Asia, specifically Chinese, you know, challenges are more a function of market. But the operating margin decline that you see in the guide is largely just a function of the shortfall in sales volume, you know, versus seasonality versus, you know, much anything else as we do kind of assume continued pricing stability in Q3 much as we saw in Q2.
spk03: Got it. And as we think about Q4, I know you're not giving guidance for that, but would you expect this correction to play out through Q4, which would mean that the components would be down sequentially in Q4?
spk04: Well, you're right, Matt. You know, we're only providing guidance for Q3, so I don't really want to speculate too much beyond that. But what I can say is that given our history, you know, with the cyclical nature of, you know, this business, you know, our experience has been, you know, historically that these kind of corrections take, you know, roughly two to three quarters to play out. That would certainly seem consistent with the the inventory levels we see in our business and our assessment of our firm backlog. Obviously, you know, a better demand environment could move things along more quickly. You know, a declining demand environment, you know, could slow things down. But that's been our typical experience historically. And that's kind of the best we can tell you about anything beyond the third quarter at this point.
spk03: Okay, fair enough. And just lastly, on OPEX, you've done a good job of communicating of taking costs down, and it looks like it was down roughly $30 million or so sequentially on OPEX. Raj, how should we think about OPEX on a dollars basis relative to where it was in the June quarter?
spk07: You mean for the third quarter, Matt?
spk03: That's right. Yep.
spk07: Yeah. Look, I think we'll get the benefit of variable costs that will come down as the volume comes down. So that part of it, you know, you should continue to see. And then, you know, as I mentioned in my comments, we're always looking for further cost reduction opportunities and optimizing the business wherever we can, you know, rebalancing our workforce around the world and We've been looking at closing underutilized facilities. So that stuff doesn't show up right away, but it certainly does help over the longer term. And so we're looking at that on an ongoing basis.
spk09: Okay, very good. Thank you.
spk02: The next question is from Melissa Fairbanks with Raymond James. Your line is open.
spk01: Hi, guys. Thanks very much. Raj, I had a question for you. I just wanted to ask about the revolver and the interest expense. I know you've been prioritizing the buybacks, and that's driving a lot of accretion. But I was wondering how you're balancing that buyback against bringing down some of the debt in the near term?
spk07: Yeah, Melissa, we really think about it in the order of priorities of our capital priorities. So we're always very much going to invest in the business to drive organic growth and expansion. That's the first priority. We also, as I mentioned before, we're always looking at the right kind of inorganic opportunities that will fit within our strategy. And then we'll use our excess cash or capacity to buy back stock if we feel that it's a good value. And we have felt that it's a great value, obviously. You know, the interest expense has been ticking up. That's largely a function of rates. You know, but the environment that we're in and that we're going to go through the next few quarters, you know, we would likely see more cash generation, and so it gives us the opportunity to do all of those things, as well as maybe even address the debt level a little bit. But, you know, we're very much within our targeted credit rating ratios, and so no concern from that standpoint.
spk01: Okay, great. And then maybe I always have to ask about inventories, of course. It's great to see inventory dollars coming down I think, you know, you had said previously on a call that, you know, June quarter was probably going to, you know, we're going to start to see some normalization in the near term. With undershipping demand and kind of excess inventories at the customer level, do you have kind of an updated view on when we could get, you know, some of that working capital released?
spk04: So, Melissa, I can give you kind of the big picture on our inventory profile. You're right. You know, we did see inventories come down in the quarter for the first time in several quarters. That's a good sign in this environment. We do expect them to come down even further in the third quarter. It's interesting. Units were definitely down in the quarter on a global basis. And, you know, ASPs largely held up, which does suggest inventory levels still reflect price increases or they would have fallen even further. You know, part of that is the fact that many of our suppliers are pretty collaborative when it comes to, you know, working with our customers as they look to reschedule, you know, further production needs. But we think we're managing inventory well. We like the quality of almost all of it. You know, the only question is when it sells through, given the environment we're in. But we do expect inventories to rotate down yet again in Q3, and hence our confidence in you know, cash generation in the near term as we look forward. Turns are not too far out of line from what we would call historical norms in any of our three big operating regions. Melissa, I would say they're each within, you know, one turn or less of what you'd expect when things finally reach steady state again.
spk01: Okay, great. That's very helpful. Thanks very much.
spk02: Thank you, Melissa. The next question is from Joe Quattrochi with Wells Fargo. Your line is open.
spk05: Yeah, thanks for taking the question. I wanted to kind of stick on the inventory dynamic. Some of your suppliers have talked about, you know, that their distributor inventory still remains, you know, well below the kind of historical levels that they have maintained previously. So I guess, like, how should we think about, you know, that dynamic and then the ability to maybe – maintain pricing as being somewhat stable in that environment, just given that inventories continue to be lean or also moving downward now?
spk04: Yeah, so Joe, maybe just to step back and think about how these corrections typically play out, right? As supply has improved and lead times have come down or suppliers have made decent progress addressing the enormous amount of delinquent demand that you know, was in the market. That typically gets solved for first with their larger OEM customers. And in many cases, they're the ones that they tend to serve directly. And then anywhere, you know, from two quarters or more later, it starts to show up in the mass market customer base. They were basically further back in the queue, if you will, you know, which we tend to serve on their behalf. So, you know, the suppliers tend to see this whole phenomenon a little bit better than a little bit sooner than we do, but the pattern typically plays out the same in each case. And we think that, you know, therefore we've got a little bit in front of us to work through, you know, the inventory build that we've experienced in the mid-market, but it's headed in the right direction. If you think about your pricing question, there's a big difference between what plays out in the largest end of the market, the large OEM customers versus the mass market. which is our primary focus. The mass market is the place where pricing and margins tend to hold up better over time than you might see in the largest of accounts. But like I said, so far we've seen pretty good pricing stability in where we've been so far this year.
spk05: Got it. That's helpful. And then just, you know, you referenced kind of typically these things kind of take two to three quarters to play out. You know, in the context of your components, you know, even margin has obviously been very strong over the last several quarters. And you talked about the structural benefits there, you know, that you put in place. I mean, how do we think about those structural benefits coming into play now as demand starts to slow? Do you think you can maintain components even margin above 5%?
spk04: We do, and I'll give you some perspective on this. I mean, if you think about the upcycle that we all just experienced, you know, that preceded the environment we're now in, excuse me, you know, probably the most significant disconnect between supply and demand, you know, than we've seen in recent history in the industry, certainly in all of my time at Aero. So a correction of some sort was probably inevitable. But if I go back to, you know, the last time that we would have seen some kind of a cyclical correction, that was 2019, pre-pandemic. And I can safely say that even with this guide, our margins are structurally better than they were at that time to a much more significant degree. And such that even if we were to see further margin pressure down the road as inventory levels fully correct, we know that some of that will cycle back just through sheer volume alone. which will help restore operating leverage. And to your point, you know, we have not lost sight of our value-add, you know, priorities and growth opportunities around things like engineering and demand creation, around things like supply chain, and they can, you know, continue to contribute to our structural margin strength. So we still, for all those reasons, we still feel really good about our longer-term city-state outlook. You know, we're basically not losing sight of where we're headed, even though the current environment is a little bit tough.
spk09: Got it. Thanks for that.
spk02: The next question is from Rublu Bhattacharya with Bank of America. Your line is open.
spk00: Hi. Thank you for taking my questions. Sean, you talked about an inventory correction happening in the channel. Could you give us a little bit more color on that? Are there specific types of semiconductors that have higher inventory in the channel? And a higher level question, how do you measure excess inventory? Like, how do you know that there's something that has excess inventory in the channel? And related to this is, if the demand environment is weaker, you think free cash flow generation in such an environment can be more, can be higher than normal. And would you use that higher cash flow for things like higher buybacks than you would have normally done? So if you can just give us your thoughts on inventory, a little bit more color on inventory in the channel, and your thoughts on free cash flow and uses of that.
spk04: Sure. A couple different questions in there, Rupaloo, so maybe we can break it down. You know, first I want to tell you that although our backlog has come down a plate, it's still multiples bigger than it was pre-pandemic. Multiples. You know, we still think, you know, roughly two-thirds of it is firm, and, you know, maybe 25% or more of it is delinquent. So, you know, that alone tells us we still have, you know, fulfillment, you know, to execute upon, you know, within our inventory profile, and we will. But it also gives us confidence that, you know, our guide is probably, you know, right where it needs to be. um the inventory bill throughout our customer base may be less specific about certain technology sets and more about just the electronics market overall it's elevated and we know that because of our turns you know we know that because of you know the feedback we get from our customers um and we certainly know that based on all of the close collaboration that we undertake with our suppliers you know all the time to kind of navigate this market so Again, we're probably a turn or so off in each of our operating regions relative to what we'd expect to see when things reach steady state. But by and large, when inventories are elevated to the extent they are across our customer base, it slows down our ability to execute on fulfillment. And it will occur. It's just a matter of the work our customers are doing to kind of realign their production schedules to solve for their end market demand. With regard to what it all means in terms of free cash flow, like I said, in a correcting environment, we feel more confident about our ability to generate cash. And maybe I'll let Raj talk a little bit about how we're thinking about what we do with that cash as we look forward in the near term.
spk07: Yeah, Ripley, nice to speak with you again. You know, I think we're going to just continue to manage it through our key priorities for capital. And so, you know, investing in the business, as I said, and then looking at inorganic opportunities. But certainly if we have more flexibility with cash, we'll, you know, I expect that we'll continue to buy back some stock. And, you know, that's been a key use of cash the last few years, as you know. And in a more plush cash environment, we'll certainly keep that as one of our key priorities. So, that won't be off the table, but we'll continue to evaluate against all those priorities.
spk00: Okay, thanks for all the details there. As my follow-up, if I can ask a question on ECS margins. So, you know, the segment margins grew 40 bibs sequentially on lower revenue. how should we think about margins in that segment for fiscal 3Q? Is there any inventory correction happening on that side of the business? And is it reasonable to think that even if the macro is weak, the fiscal fourth quarter is typically the strongest quarter for that segment, both from a revenue and margin standpoint. Do you think that relative outperformance in the fourth quarter maintains even in this environment? Thanks.
spk04: Sure thing, Rupalu. Well, again, you know, probably not going to talk a lot about Q4 at this point because we're only guiding Q3. You are right, Q4 is very predictably the largest quarter of the year, you know, when you think about seasonality. But to your first question, you know, there really aren't any inventory challenges in that business for us. In fact, you know, this is working capital friendly for us because even in most places where we participate in hardware, you know, the model is more drop ship in nature. We've always liked, you know, that piece of the model for us because, again, it's working capital friendly. I would say, you know, our backlog has continued to build, and that business is a function of all the kind of the multi-period cloud and software subscriptions, you know, that we're helping the channel navigate, and those things tend to get built out over time. And, you know, that piece of our business is growing, which we think is good for the model. longer term, but there's no barriers to revenue or fulfillment as it relates to elevated backlog or inventory. Most of the supply chain challenges related to systems in that business have all been normalized.
spk00: Okay. Thanks for all the details.
spk09: Appreciate it.
spk02: Again, that's star one. If you'd like to ask a question, the next question is from William Stein with Truist Securities. Your line is open.
spk06: Great. Thanks for taking my questions. I've joined a little late, so I apologize if you might have addressed this already. But I think in the CFO commentary, you talked about shortage market revenue. And I'm hoping you can just elaborate on your exposure to that part of the components market. the impact it's having on your business today and in terms of margins, especially, and how you expect that to progress in the next few quarters?
spk04: Certainly. So if you think about the, you know, the operating margin decline we saw in the second quarter, Will, it was really a function of three things. You know, one part was regional mix. And that was just due to the fact that we saw some sequential growth in Asia. uh one part of it was just the normalization of our shortage market activity which typically has been most prominent in the americas and as you know lead times have come in and supply and demand are you know moving towards getting you know better aligned you know the activity levels in that piece of the market have have declined pretty significantly we saw some further erosion of that activity in q2 and you know that had some pressure on margins and then thirdly and most substantially those strictly a function of the short ball and volume overall, you know, which puts some pressure on operating leverage. But we think, Will, that the, you know, the upside and now the, you know, the downside by way of, you know, period over period compares as it relates to our shortage market activity have largely normalized. And, you know, that piece of the margin stress should get a lot simpler and less pronounced from here.
spk06: That's helpful. Appreciate it. One other, I know, pardon me, inventory has been discussed a couple times already, but I just want to go at this a little bit different way. Among the semi-companies I cover, most of them sort of beat their chest about how they start the channel of inventory through this whole last cycle. And so while your inventories have increased, they're very well protected. And so it's a little bit difficult to reconcile these two data points. But I think the issue is that smaller companies, even some public ones I've spoken to, haven't been able to do a great job of sort of managing this issue. And so some I've spoken to have told me about six months of inventory at distribution. I don't know if you're experiencing that with any of your suppliers, but what the real question gets to is I'm hoping you can Talk through the consistency or, on the other hand, disparity of your inventory across technologies and suppliers. My guess is that it's very uneven relative to what it usually is. I'm hoping you can sort of help us clarify this. Thank you.
spk04: Yeah, sure, Will. And maybe just I'll repeat a little bit of what I said earlier. Part of this is based on the pattern of how these corrections play out. Remember that. you know, suppliers tend to solve for the larger customer demand, especially, you know, when it's as delinquent as we saw it during the last cycle, you know, before they solve for the mass market, right? So we'll typically see the inventory bill later than they will just because if mass market customers were, you know, further back in the queue. So that accounts for a little bit of the delta in timing and therefore our experience now versus you know, their experience then. You're right in assuming that, you know, the inventory mix is not uniformly problematic for all suppliers and all technologies equally in all regions. You know, we are talking about this in the aggregate, but I would say, look, most of our suppliers are pretty collaborative when it comes to meeting the, you know, the evolving production schedules of our customer base, you know, as they work through their inventories. That's evident in the fact that our units came down pretty substantially in Q2, and we expect, you know, to see that again in Q3. And, you know, the wild card here is the fact that the ASPs are holding up, so that's inflating inventories, you know, beyond, you know, what they would look like otherwise. But if you're looking for, you know, one or two long poles in the 10, you know, to define this problem, you know, we would see it more generally across the portfolio. There are some cases where you know, suppliers have different programs in place. Some are more favorable than others, but by and large, you know, we feel good about the handle we have on this and, you know, our ability to work both customers and suppliers to work through this as expeditiously as possible, you know, given the broader, you know, market demand question.
spk09: Okay. Thank you. Thank you.
spk02: We have no further questions at this time. I'll turn it over to Anthony Benjimenga for any closing remarks.
spk08: Okay. Thanks again, Chris, and thank you all for joining today's call. We look forward to meeting you at upcoming investor events. Have a great day.
spk02: This concludes today's conference call. You may now disconnect. Thank you.
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